DALBAR today issued a statement suggesting that US regulators are focused on the issues that grab headlines while continuing to ignore the true threats to investors. The statement read as follows:
If you are like the average investor, your investments were down by $20,000 from the market highs in early 2000. The walloping losses must have tested your confidence in the stock market and the professionals that help you to invest.
And just when you started to see your portfolio come alive again, an unending series of mutual fund scandals occupied the financial news. Regulators jumped over themselves to curb the bad practices and save you from losses due to deceptive underhand practices.
And if you are like the average investor, these scandals cost you $0.25 in all. Yes, these scandals have nothing to do with the $20,000 loss delivered by the market practices of the 1990s and cost you less than a postage stamp.
Adding insult to injury, the increased regulation will not prevent the $20,000 loss from happening again, instead it will save the $0.25 loss due to market timing, late trading and arcane compensation schemes. These proposals ignore the $20,000 problem caused by Enron, Worldcom, Tyco, Global Crossing and the entire dot com industry.
If you are like the average investor this increased regulation will cost you about $2.00. Yes, regulators are forcing the investment community to spend $2.00 (that they will certainly ask you to pay) in order to save you $0.25! What a deal!
The President, Congress, state legislators and regulators should be severely criticized for failing to address the $20,000 problem and wasting their time and attention on a $0.25 issue. These representatives of the people at the federal and state level are simply opportunists that seek fame by fabricating crises that divert attention from real problems.
Responsible representatives of the people would divert attention from market timing, Martha Stewart, late trading and soft dollars, which have a negligible effect on investors’ money and instead examine the weaknesses in the financial system that permitted the inflated market of the 1990’s followed by massive losses of 2000 to 2002. As citizens and investors we should demand that attention be given to the major failures and not to the expedient victims of the moment.
Phone, write, e-mail and call your representative in congress and let him/her know that you are outraged at being hoodwinked! Ask what is being done to avoid a repetition of the market bubble of the 1990s.